eBay Inc (NASDAQ:EBAY) would be doing investors a favor by spinning off their Paypal division, and it’s a move that hedge fund shareholder Leon Cooperman believes the company will eventually make, thanks to the input of himself and others. In a wide ranging interview with Bloomberg, Cooperman, the chairman and chief executive officer of hedge fund Omega Advisors, which holds 3.189 million shares in eBay Inc (NASDAQ:EBAY) worth $159 million, spoke about the company and their payment processing division.
“We own eBay because we think ultimately the right thing for them is to spin out Paypal, and the summation of the two parts would be we think worth at least 20% or more. We kind of agree with Carl Icahn in his advocacy. We tend to be more passive than active; we express our views to management privately, so I think eBay knows our views privately, and we think ultimately they’ll reach the same conclusion, and I don’t think Apple Pay has big implications for Paypal,” Cooperman said.
Icahn, whose Icahn Capital Lp has a large stake in eBay Inc (NASDAQ:EBAY) of over 30 million shares worth more than $1.5 billion, was a vocal critic of eBay Inc (NASDAQ:EBAY)’s management earlier this year, declaring them one of the worst-run companies he had ever seen. He also demanded they spin-off Paypal. Icahn eventually backed down from his demands and made peace with eBay Inc (NASDAQ:EBAY) management.
More recently however, eBay Inc (NASDAQ:EBAY) appears to be admitting (or has finally been convinced) that Icahn and others were right, and that spinning off Paypal may in fact be best for all involved, including the shareholders, whom they had previously claimed were better served through retention of Paypal. It was reported last month by The Information that eBay Inc (NASDAQ:EBAY) was informing new hires that Paypal may be spun off as early as next year
eBay Inc (NASDAQ:EBAY) has begun to recover from its post-Apple Pay announcement swoon, during which it tumbled 5% over two days on fears that Pay would eat into Paypal’s business. As Cooperman said, those fears have been somewhat alleviated since, and they are generally no longer seen as a direct threat to Paypal’s existing business. eBay Inc (NASDAQ:EBAY) is trading at $52.16 today in afternoon trading.
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